{"id":19733,"date":"2017-12-11T01:00:08","date_gmt":"2017-12-10T14:00:08","guid":{"rendered":"https:\/\/www.realestatetalk.com.au\/?p=19733"},"modified":"2017-12-11T01:00:08","modified_gmt":"2017-12-10T14:00:08","slug":"strategy-vs-tax-benefit-shannon-davis","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/strategy-vs-tax-benefit-shannon-davis\/","title":{"rendered":"Strategy vs tax benefit \u2013 Shannon Davis"},"content":{"rendered":"<p><strong>Shannon Davis<\/strong> defines the difference between having a strategy and looking for a tax benefit.\u00a0 He says many investors get confused and why one is a strategy and the other is an outcome.\u00a0 He talks about the 4 main areas of returns.<br \/>\n<strong>Transcript:<\/strong><br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>Quite often, we see property investors get confused between having a strategy, having an investment strategy, and tax benefits. Let\u2019s try to demystify this. Let\u2019s try to pull all this apart and take away some of the confusion. Shannon Davis joins me. Shannon is from Metropole Property Strategists. They are strategists, and they can help you set one up.<br \/>\nGood day, Shannon. How are you doing?<br \/>\n<strong>Shannon:\u00a0\u00a0<\/strong>Good day, Kevin. Good, thanks.<br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>Do you see this often? Do investors get confused between the two, Shannon?<br \/>\n<strong>Shannon:\u00a0\u00a0<\/strong>Yes, they think \u201cOh, I have a big tax bill, so I might go and buy another negatively geared property,\u201d and then in a certain time, that property might not be negatively geared anymore. Then they get another one, and they have land tax, and then they might sell these properties for a gain.<br \/>\nTax deduction is nice, but it\u2019s not the be all and end all. When it comes to investing, we want to make sure our investments are A-grade and are going to get us good capital gains and yields going forward.<br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>Yes, there is some confusion, isn\u2019t there? We\u2019ve talked in the show in the past about negative gearing, how some people see that as an investment strategy, but it\u2019s really just an outcome.<br \/>\n<strong>Shannon:\u00a0\u00a0<\/strong>Yes, it is. It\u2019s an outcome depending on the interest rate of the day, the level of deposit, how rents are rising or falling. So, yes, it\u2019s really just an outcome; negative gearing or positive gearing is not really a strategy.<br \/>\nWhat there is are four main returns for properties: capital growth, so that\u2019s the increase after purchase. There are also rental yields, so your property is going to give you an income, and that\u2019s important for the investor. There is the tax deduction that can come through such things we\u2019ve mentioned as negative gearing and depreciation. And the one big thing with property is that you should be looking to add value.<br \/>\nWe can\u2019t go into Woolies and paint the walls and hope our shares go up, but with property, we can definitely add value, and that\u2019s one of the things that sets it apart as an asset class.<br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>Do you look for properties specifically that you can add some value to? And how hard is that?<br \/>\n<strong>Shannon:\u00a0\u00a0<\/strong>I\u2019m a value investor; I don\u2019t like paying for a renovator\u2019s margin or a developer\u2019s margin. I\u2019m just going to do that myself and get a bit of an upside in the increase that I can create. So, brand new properties are nice and attractive and shiny and new but probably a slow way to wealth because you\u2019re paying a big developer\u2019s margin all the time, and that slows down your capital appreciation.<br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>Shannon, what are the steps to setting up a good strategy?<br \/>\n<strong>Shannon:\u00a0\u00a0<\/strong>I think a lot of the time, it\u2019s getting the work done first and foremost in your head: what you\u2019re comfortable with as a borrowing strategy, what the bank is prepared to lend you. But what you\u2019re comfortable with is the most important thing.<br \/>\nFrom there, find out form your accountant what would be the most tax effective entity to hold it in, and also you have to consider asset protection there. Then from there, we\u2019re going to look at the strategy and the sourcing of the property. Are you looking to buy and hold and renovate, or buy and develop, even?<br \/>\nThen it\u2019s executing on that: going out, finding it, not paying too much, negotiating well, not getting emotional, and making it a part of your portfolio for the long term.<br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>You and I have talked off air and on air in the past about putting the cart before the horse \u2013 in other words, why are you getting into investment? Is it for taxation, or is it for wealth creation?<br \/>\n<strong>Shannon:\u00a0\u00a0<\/strong>Yes. It\u2019s definitely the wrong way around. There have been lots of tax-beneficial investment strategies, like almond farms or investing into movies or even certain types of properties, but it\u2019s not the basis of a great investment if you lose your capital in the first place.<br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>Very sound advice always from Shannon Davis. He\u2019s from Metropole Property Strategists, and also the co-host of Buy in Brisbane, which is a great new vlog that you\u2019ll catch on our site, as well.<br \/>\nShannon, thanks for your time. I look forward to catching up with you again soon.<br \/>\n<strong>Shannon:\u00a0\u00a0<\/strong>No worries, Kevin. Any time.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Shannon Davis defines the difference between having a strategy and looking for a tax benefit.\u00a0 He says many investors get confused and why one is a strategy and the other is an outcome.\u00a0 He talks about the 4 main areas of returns. Transcript: Kevin:\u00a0\u00a0Quite often,&#8230;<\/p>\n","protected":false},"author":176692471,"featured_media":19734,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[32,34,10,11,13,36,22,25],"tags":[101],"class_list":["post-19733","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-a-property-topic","category-finance-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-research-topic","category-sponsored-channels","tag-podcast"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Strategy vs tax benefit \u2013 Shannon Davis - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/strategy-vs-tax-benefit-shannon-davis\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Strategy vs tax benefit \u2013 Shannon Davis - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"Shannon Davis defines the difference between having a strategy and looking for a tax benefit.\u00a0 He says many investors get confused and why one is a strategy and the other is an outcome.\u00a0 He talks about the 4 main areas of returns. 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